Mayor Vetoes Measures to Reduce Bank Foreclosed Home

by Simon Lindsay on Foreclosure Help

The city council of Cranston in Rhode Island has approved ordinances that would have prevented further spread of bank foreclosed home in the area. When it approved the foreclosure ordinances, the council was expecting some legal challenges. But they never expected that the city mayor would be the one to oppose the measures.

Mayor Allan W. Fung rejected the foreclosure ordinances that would have reduced the number of foreclosure properties in the city. He said that he appreciated the initiative to help distressed homeowners remain in their houses but he could not support any measure which he claimed contradicts the state law.

He explained that it was deputy city solicitor Evan Kirshenbaum who told him that the foreclosure ordinances contradict the state law, which led him to make the decision to veto the measures.

The foreclosure prevention measures would have required banks and lenders to have third-party mediations with troubled homeowners before they go through with foreclosures. The measures also required banks and lenders to issue written notifications to renters before they start the foreclosure proceedings.

Before approving the measures, council members said that despite the legal challenges, the ordinances may help distressed homeowners remain in their houses and prevent the number of bank foreclosed home from increasing.

According to industry experts, the nine members of the city council plan to seek to override Fung’s veto. The override would require at least six affirmative votes.

Council President John E. Lanni Jr. said that he favors for an override, adding that so many people have been losing their homes to foreclosures.

Last year, there were 3,479 homeowners in Rhode Island who lost their properties to foreclosures. As of end of September, there were already 2,443 documented cases of foreclosures.

The foreclosure ordinances in Cranston were patterned after two measures in Providence which took effect on September 1. The Providence measures were able to help seven distressed homeowners remain in their houses and have not met any legal challenge since.

Kirshenbaum explain that the foreclosure ordinances would have created problems because they contradict Rhode Island laws that cover loan agreements and foreclosure recordings.

Meanwhile, the General Assembly has passed a bill that would require banks and mortgage lenders to send 45-day notices to distressed borrowers before starting proceedings that may result to more bank foreclosed home.

Furthermore, the bill also requires banks and lenders to notify homeowners at risk of foreclosures about the availability of free mortgage counseling.